Contractors provide services to your business and perform work to further their own business and as such have different setup requirements.


To configure contractors in ClockOn there are some important settings that need consideration. These include;

  1. Configuring a Rule Set for a Contractor
  2. Configuring Contractor Allowances
  3. Adding a Contractor from the Employee Screen
  4. Time Sheets for Contractors
  5. Payroll for Contractors


For more information regarding the difference between a standard employee and a contractor, please see the following ATO article https://www.ato.gov.au/business/employee-or-contractor/difference-between-employees-and-contractors/


Configuring a Rule Set for a Contractor

As a first step, you need to set the payment rules for the contractor staff, this is done by adding and configuring a Rule Set that the employees can be linked to. To locate these settings, please see the Rule Set Overview article.


INFO: By default the majority of settings are disabled when adding a new Rule Set to the system, however we still recommend a quick review over each section to ensure that there are no surprises at payroll


Once a new Rule Set has been added, the settings can be adjusted for these employees. We recommend the following settings.

  1. Name and Description details accordingly (typically using either "Contractor" or the individual's name).
  2. The Employee Type needs to be set to Other.
  3. Contractors typically use the Pay Type as Hourly.




If you are not paying the contractors an SGC amount, then there is an additional step to adjust the super settings. 

  1. Set the Calculation method to Manual
  2. Set the SGC agreed percent to 0%
  3. Disable all additional options in this section.



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Configuring Contractor Allowances

Next, we need to establish a list of allowances to affect all contractor employees. To do this you will need to add an allowance template for this group of staff, that can be assigned to the employee instance. 


For a guide on how you can setup a new allowance set, please see the Allowance Set Templates article.


One of the common setups for Contractor employees is an allowance for "GST on Fees". If you would like to add this to the system the settings for the allowance are below.


Edit the allowance set and click the Add button, adding.

  1. Set the Name to GST on Fees
  2. Set the Process As field to Reimbursement (GST Only) 
  3. Set the Amount to Percentage of wage and enter the Value to the GST percentage (10% at the time of writing).



PLEASE NOTE: The allowance for GST on Fees may not apply to contractors earning less than $75,000, we recommend seeking advice from the ATO on your requirement.


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Adding a Contractor from the Employee Screen

Now that we have the pay rules and a standard allowance set, we can add the contractor employee into the system. This process is the same as adding in a standard employee but has a few additional items that need to be adjusted afterwards.


For the basic settings on how to add an employee please see our Adding Employees article.


Once the employee is in the system you will need to Edit the employee's profile and select the Pay tab for the employee. 


Locate the Award Configuration section, and use the Select button to pick the Award and Rule and Allowace Sets that the employee needs to be linked to.


 


Next, locate the Tax Details section and view and adjust the following settings as necessary, Typical settings include the following;

  1. Set the contractor's Tax Category to No Tax. This will prevent the system from reserving PAYG tax amounts for the employee.
  2. Set the ABN as provided by the contractor.
  3. Set the Gross Type setting to Voluntary Agreement. 
  4. If the Contractor is not required to be submitted to the ATO through STP, deselect the Include in STP option. 



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Time Sheets for Contractors

Timesheets for contracted staff are treated the same as any normal staff member, they can either be created in advance, retrospectively or the employee can clock them through any available means that the business is currently employing. 


The Creating & Editing Time Sheets guide details the process for adding timesheets into the system.


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Payroll for Contractors

Assuming that the previous settings from this guide have been applied, the payroll process for the contractor employee is the same as for any other team member. 


The Processing Payroll guide details the process for creating and processing payrolls in the ClockOn system.


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